Inventive step: another nuance

In Teva UK Ltd v Merck & Co, Inc [2009] EWHC 2952 (Pat), 20 November 2009, Mr Justice Kitchin had to consider Teva's claims that (i) a Merck patent for an ophthalmic preparation for the treatment of glaucoma was invalid for obviousness in the light of a single item of prior art and common general knowledge and that (ii) the same patent was invalid for added matter and insufficiency. On the other side he had to consider Merck's uncondition application to amend the patent and Teva's response that the amendment was not allowable and that, even if it were, it still wouldn't save the patent. Holding the patent invalid for want of inventive step, the judge did not need to review the issue of insufficiency.

The judgment appears relatively uneventful in terms of its legal content, though there is another little gentle nuancing of the way a court should approach inventive step. After reciting the usual authorities, the judge states (at para.98):

"I think that Mr Birss [for Merck] is right that one must proceed with caution when faced with an obviousness attack based on a suggestion that the skilled person would embark on a research program in the course of which he would discover that a product or compound was effective. This is particularly so where the technical effect is one which is newly discovered, or impossible or very hard to predict. That is because the expectation of success may be zero, or inadequate to drive the research forward. In the end it will all depend on weighing the various factors as they appear from the evidence in the case. That is what I have endeavoured to do in the present case".

This approach appears both realistic and fair: the only problem is deciding when the conditions for its application are present.

Proof of availability the public: what standard?

Some of you may already have read the IPKat's post this morning on the ruling of a Hearing Office of the UK's Intellectual Property Office in Ranger Services Ltd's application, BL O/362/09, 17 November 2009, concerning the status of cited prior art which had been obtained from an internet archive.

Right: it may be prior art now, but when did it start to be so?

The decision raises a matter of interest to patent litigators: the degree of proof required with regard to the date on which internet-held prior art is taken to be made available to the public. The recent European Patent Office guidelines (here), said the applicant in this case, required proof beyond reasonable doubt as to the date on which the cited prior art was made available to the public. The Hearing Officer disagreed:

"While it is relevant and appropriate for me to take note of EPO practice in such matters, it does not bind me in the way that UK law does. The maxim of the English Courts in civil matters is that the correct assessment to be made is on the “balance of probabilities”, whereas in criminal matters, it is one of “proof beyond reasonable doubt”. In this case, the recent EPO note would appear to support that this view, despite Mr Hirsz’s argument to the contrary, and I must therefore decide the issue on “the balance of probabilities”" (para.47).

What is the position in other EPO Members? Do any readers know?

Community patents and ULPS: a secret system?

Writing earlier today on his IP::JUR weblog ("EU Community Patent and UPLS: Will There Be A Political Breakthrough Soon?") Axel H. Horns provides an update on his post of 2 November ("EU Community Patent: The Mill Goes On and On"), citing the blog of the Intellectual Property Experts' Group to the effect that

"On December 3 and 4 ... the Competitiveness Council will assemble again to see if they can reach an agreement on 'a general political' approach for the Community patent/UPLS efforts. The question on what language(s) should be the common one(s) for a potential community patent remains a sore spot for many member states. [...]"

But as Axel observes, there has been considerable recent activity in the EU Council which, it appears, has been carefully locked away from the general public:

* 16141/09 - Enhanced patent system in Europe - Draft Council conclusions - Drafting proposal by the Hungarian delegation; 17-11-2009
* 16180/09 - Enhanced patent system in Europe = Comments by the Danish delegation; 17-11-2009
* 15695/09 - Draft Council conclusions on an enhanced patent system in Europe - General approach on the proposal for a Council Regulation on the Community patent; 13-11-2009
* 15695/09 ADD 1 - Enhanced patent system in Europe - Draft Council conclusions; 13-11-2009
* 15695/09 ADD 2 - Proposal for a Council Regulation on the Community patent - Revised text; 13-11-2009
* 15148/09 - Draft Council Conclusions on an enhanced patent system in Europe - Revised/annotated text; 29-10-2009
* 15122/09 - Draft Council Conclusions on an enhanced patent system in Europe - Comments by the United Kingdom delegation; 28-10-2009

As Axel notes, the decision to build UPLS on the basis of an Agreement outside the EU Lisbon Treaty not only enables accession by non EU-States like Turkey but also means that the painstaking process of ensuring ratification by all EU member States plus interested States outside the EU has to start again. The Danish Government has already indicated (Document 14531/09) that this would require a transference of competence and therefore either a national referendum or a 5/6 majority in Parliament. The still-unpublished legal questions referred to the European Court of Justice (ECJ) are also still pending.

PatLit notes that negotiations relating to the Anti Counterfeiting Trade Agreement (ACTA) have been conducted in conditions of almost total secrecy, which has caused a good deal of resentment. While not quite the same degree of black-out has accompanied the current burst of initiatives relating to the Community patent and UPLS proposals, there seems to be little willingness to open the substance of these proposals to the well-educated, skilled and highly-trained practitioners who will be responsible for making them work (or for demonstrating that they can't).

In a representative democracy such as that which the European Union purports to be, lip-service is often given to the importance of there being a well-informed electorate, whose mature and considered wishes might be translated into legislative policy. However, a cynic might suggest that intellectual property policy is far too important a matter to be left to wider debate and that it is for interested parties to scavenge the contents of leaks, Tweets, blogs and the rumour-mills in search of a better understanding of current developments.

Unfortunate, but curable

In Leo Pharma A/S and Leo Laboratories Ltd v Sandoz Ltd [2009] EWCA Civ 1188 the Court of Appeal for England and Wales (Lords Justices Jacob and Patten) today dismissed Sandoz's appeal against Mr Justice Floyd's finding in May, in [2009] EWHC 996 (Pat), that Leo Pharma's patent was valid.

There was not a lot of law in this appeal, which Jacob LJ rightly described as a full-frontal attack on the trial judge's findings of fact, dressed up as an appeal in law. Jacob LJ closed his judgment with a further plug for a single European patent court (whatever form that might take):

"77. This appeal falls to be dismissed. I only add a couple of points. This is yet another case where validity has to be assessed by several national courts. We have reached the same result as that in Holland at first instance (where the argument was in part different). The Bundespatentgericht has gone the other way – but working on different prior art, prior art which Sandoz in this country abandoned. Different results in different countries based on different cases is, of course, explicable. It is an unfortunate state of affairs, curable only by a single European Patent Court".

France: the new IP litigation regime

Via the 24IP Law Group comes news of the reorganisation of the French intellectual property court system. According to a recent circular:

"In two decrees dated 9 October 2009 the French Government has reorganised its court system for intellectual property. As from the 1 November 2009 any disputes involving technical intellectual property rights, such as patents, utility models, supplementary protection certificates or semi-conductor design protection, will be heard in front of the Paris High Court.

The Paris Court of Appeal will be responsible for hearing any appeals against decisions of the French Patent Office (INPI) relating to technical IP rights and also for non-residents in other IP matters. Only disputes between French residents involving the other matters, such as trademarks, protective designations of origin, design rights and copy-rights, will still be held in the existing regional courts.

This concentration of all disputes in patent and related matters in France is particularly welcomed in the light of the recent changes in European law. There had been differences in the past between the existing courts in France concerning the revocation of patents after grant. It is to be hoped that centralising all such matters in one central court will lead to greater harmonisation of case law.

The increased tendency of the Parisian Court to grant damages that are greater than the value of a pure license fee and also for compensating the winning parties for the costs of pursuing their case is also to be welcomed.

The new central court in Paris will also simplify the procurement of inspection orders (“Anton Piller”) as it will no longer be necessary to find a local attorney with the required technical expertise to discuss the matter in a provincial court.

The French Government hopes that the new measures will lead to the development of Paris as a forum for solving patent disputes that will be competitive with the courts in England and in Germany".

PatLits adds that the two decrees, both of which can be found on the Eplaw website, are

* Décret n° 2009-1204 du 9 octobre 2009 relatif à la spécialisation des juridictions en matière de propriété intellectuelle;
* Décret n° 2009-1205 du 9 octobre 2009 fixant le siège et le ressort des juridictions en matière de propriété intellectuelle.

Blastocysts questions for ECJ

Kristof Neefs (Altius) has informed PatLit of a press release from the German Bundesgerichtshof. Germany's Supreme Court has referred a question to the ECJ in respect of Article 6 of the Biotech directive, which sets out exceptions to patentability for those inventions which are contrary to ordre public or morality. Says Kristof:

"Though the text of the judgment is apparently not yet available, I understand (though my command of German is limited) that the question relates to the interpretation of the term “human embryo” in the Directive. More particularly, the court raises the question whether stem cells gathered from a blastocyst (a specific stage of development of a fertilized egg cell) are considered human embryos even though they are as such no longer capable of developing into a human individual. The court would also like to know whether a blastocyst itself is to be considered an embryo in the sense of the Directive".

Some background concerning the litigation leading to this reference, and some of its political dimensions, can be found on Mark Schweizer's post on the IPKat here.

Attitude survey addresses impact of US shift to first-to-file

The highly-respected Patently-O weblog is running a survey of readers' attitudes towards the disruptiveness of a shift in the United States patent system from first-to-invent to first-to-file. According to the rubric:

"Although the legislative switch to a "first-to-file" system invokes the idea of eliminating priority contests between two competing inventors, some proponents of first-to-file systems are actually asking for a more expansive absolute novelty system.

Switching the US to an absolute novelty system would have three primary disruptive components: (1) ending interferences and other priority contests; (2) ending the ability for patentees to avoid putative prior art by proving an earlier invention date; and (3) ending the grace period for an inventor's own prior disclosures. These changes would impact the law as applied both in prosecution and litigation.

In this survey, I am hoping to get a sense of the relative importance of these changes. The survey should take only about five minutes to complete".

You can access the survey here.
The race to the Patent Office here

"The Future of Patent Litigation": this year's IBIL seminar

This afternoon University College London's Law Faculty hosted the second annual seminar on "The Future of Patent Litigation", under the auspices of the Institute of Brand and Innovation Law (IBIL) which was founded in 2007 by the late Professor Sir Hugh Laddie. Chaired by Professor Lionel Bently (University of Cambridge) the seminar was packed to the rafters as a capacity crowd received in rapt reverence the papers of Lord Justice Jackson (Litigation Costs), the Patents Court's Mr Justice Arnold (The Patents County Court) and Professor Adrian Zuckerman, University of Oxford (Civil Procedure as it Affects Patent Law).

Lord Justice Jackson (right) issued a broad disclaimer: he was not an IP lawyer and was only speaking because of his involvement in the forthcoming report on civil litigation costs; he couldn't say anything about the report's contents since they were confidential -- and he couldn't even listen to what others had to say, since his consultation period had ended.Nor was he an authority on costs. However, having been asked by Master Rolls to undertake his review, he felt that as the most junior Lord Justice of Appeal he couldn't say no.

Speaking without notes, Lord Justice Jackson gave a fascinating account of the methodology of the process leading to his report, as well as the pressure of a tight schedule. He had been given just one calendar year, which he divided into three phases: (i) the initial fact-finding; (ii)consultation, (iii) drafting the report. He did not however have to work alone; assisted by a panel of seven assessors meeting monthly, he had a sounding board for discussion of intractable problems.

In Phase (i), encouraged by Dame Hazel Genn, he set about gathering costs from all the judges. Conceding that this was just one part of the picture since most cases settle before they reach a judge, he explained that a trawl was made of all costs cases over the period of one month. Added to this, he obtained data from insurance companies relating to out-of-court settlements in which they had been involved. A literature review was conducted, as well as outline studies of how overseas jurisdictions deal with costs. Adrian Zuckerman had recommended Germany: an effective fixed costs regime operated there, with software to enable the user to discover recoverable costs in every case. Also examined was the United States, where there is no cost regime, subject to certain exceptions.

While intellectual property constituted just one fifth of one chapter out of the 64 in his report, Lord Justice Jackson stated that IP litigation was still a very important topic: IP was the only area in the civil justice system where users on both sides of fence were pressing for a fixed costs regime in addition to fast-track litigation. It was also mentioned that the UK's IP courts are to some extent in competition with those of continental Europe.

In Phase (ii) he attended a large number of meetings with user groups and sectoral interests. Four large seminars were organised by the Master of the Rolls' office, plus other seminars on legal aid, conditional fee arrangements (CFAs) etc. He sought to gather the views of lawyers, court users and the Federation of Small Businesses as well as reading thousands of pages of submissions by the cut-off stage of Phase (ii), 31 July 2009.

Phase (iii) has been a period of working steadily on the report, with the assistance of a solicitor from Lovells and an accountant from Deloittes. Big issues included whether and, if so, how to fix costs; what to do about CFAs; is it right for a litigant to increase the risk of cost to the other side via a contract he makes with his lawyer? Strong views have been expressed on each side of these issues, which means that the report will be heartily condemned whatever it says.

“Costs are a sore point”, said his Lordship, in what must have been the understatement of the evening. Other issues were also sore, though. One interesting question is whether contingency fees should be a percentage of the damages awarded. Should we follow the Ontario route, allowing the successful litigant to recover just his conventional costs but to pay the rest out of his own pocket? In the field of personal injury litigation, a successful plaintiff might lose around 5% of the awarded damages on this basis.

What do we do about disclosure, “a massive driver of costs”, he asked. Masses of emails and other documentary material are now recorded electronically, and costs with regard to their disclosure can become astronomic. New rules to control electronic disclosure will come in next year anyway. In contrast, in continental Europe there is little or no disclosure. Perhaps we should order standard disclosure less often, or make it more specific as is the case under IBA arbitration rules. A range of view has been expressed on these issues, but no consensus has emerged.

Lord Justice Jackson concluded that the Review had to be delivered by the end of December, and that a couple of early copies would be submitted then. However, it was unlikely to be publicly available before mid-January 2010, when it would emerge in both hard copy and online versions.

Speaking next, Mr Justice Arnold spoke of the great efforts that have been made by the Intellectual Property Court Users' Group Working Committee to enhance the performance of the Patents County Court and to make it swifter, cheaper and more accessible to small and medium-sized entities (readers may recall that this theme was the subject of his lecture to the CIPA Congress earlier this year: see PatLit here). He reminded the audience that patent lawyers are expensive and that SMEs can be priced out of the system.

The objective of the Working Group was to focus on low-cost, less complex claims. Its proposals, submitted just in time for consideration by the Jackson Review on 31 July, did not address Patents Court costs or litigation at all.

The most welcome part of Mr Justice Arnold's talk for this member of the audience came when he addressed the role of the case management conference. He emphasized that the judge has important role, since the case management conference is not “mere directions hearing”. It is for the judge to make firm decisions with regard to potentially expensive issues such as the extent to which disclosure should be ordered and the need for experiments, further factual evidence, expert evidence, cross-examination and further written arguments. The judge should only order them if they’re (i) related to specific identified issues and (ii) proportional in terms of costs.

Addressing civil procedural issues, Professor Zuckerman followed Lord Justice Jackson's precedent and declared himself not to be an IP expert; he did however recognise the role of specialist intellectual property courts as a means of providing the necessary degree of expertise and of bringing specialist knowledge to bear. In this vein he discussed the problems that arise when IP litigation leaves the specialist courts and re-enters the mainstream. By way of example he related the case of Doncaster Pharmaceuticals v Bolton Pharmaceutical 100 Ltd (click here for criticism of this decision by the IPKat), in which a Court of Appeal consisting of non-IP experts substituted their own opinion for that of an IP judge as to whether a case could be disposed of by summary judgment or go to full trial: Mummery LJ expressed the view that specialist knowledge was simply not needed in such cases.

There were however times when it was arguably better for the specialists not to be able to resolve issues among themselves, the paradigm case being that of 'reverse payments' made by patent owners to the would-be manufacturers of generic drugs in order to settle pharmaceutical
disputes by keeping their cheaper competitors off the market. This sort of practice, common in the United States where the Wax-Hatchman Act prevailed, was not apparently prevalent in Europe -- though the Commission is keeping watchful eye on the pharma sector.

[At this point I had to leave. If I receive further information concerning the seminar, I shall be happy to post it with due attribution].

The UPLS: will it make a real difference?

The final session of todday's "Standards and Patents" conference was dedicated to the Unified Patent Litigation System (UPLS, or "Upples" as I like to think of it), the new reality now that EPLA, the European Patent Litigation Agreement, is dead and buried.

First to speak was Nokia Director of IPR, Regulatory Affairs, Tim Frain (right), who gave an up-to-the-minute account of the impending reality of an international convention, which should be done and dusted this December. Tim's PowerPoints, which are as information-rich as they are visually riveting, can be viewed here.

Tim's presentation was followed by mine. Since Tim had covered the subject so well, I chose to argue the thesis of "change = no change", suggesting that the position of patent owners and litigants in Europe post-UPLS -- in terms of business plans, risk, strategy, interference from competition authorities and so on -- would be much the same as they are at present. My PowerPoints, which give some idea of my points but do not adumbrate them in detail, can be accessed here.

Patent standards litigation: a judge's view

Attending Day Two of the "Standards and Patents" conference this morning, I was among the international audience of participants drawn from industry, standards organisations and private practice who were privileged to hear Mr Justice Floyd speak on the subject “Patents and Standards: the role of the courts”.

Floyd J explained that patent standards litigation was really a new breed of patent trial. Old-style trials would typically consume 4-5 days, addressing the usual issues of validity and infringement of a single patent. Standards trials were different: the parties are usually litigating over a bundle of patents and are having recourse to the courts because they had failed to agree licence terms; they’re not so much interested in a judgment that stops anyone infringing but, rather, they want the court to weigh their patent portfolio against the portfolios of others.

New issues arise, in particular essentiality: is a particular patent essential to the operation of a standard? From its owner’s view the best patent is the one you have to infringe if you’re going to manufacture, since that's what makes it essential. Another new issue is the assessment of FRAND licensing principles: on what basis are these principles embodied?

The judge related that, in England and Wales, the old Order 15 r 6, relating to declaratory judgments, was a tool that developed considerably over the years. Binding declarations of right might be made under it, regardless of whether other relief may be claimed. After the Woolf Reforms of 2000, the CPR 40.20 is thought to have broadened this rule, providing for declaratory relief regardless of whether any other cause of action is asserted.

Originally it was thought that a party couldn’t seek a declaration if he wasn’t being sued. “But things have moved on”: the judge mentioned what Lord Woolf said in Messier Dowty v Sabena: the courts should not be reluctant to grant declarations if they assist in doing justice (Lord Woolf). The effect of granting a declaration must not however be pointless, like “shouting in an empty room” (to quote the late Sir Nicholas Pumfrey).

Floyd J emphasised that declarations of inessentiality were not the same as declarations of non-infringement, for which there is a statutory basis. There must however be a real dispute between the parties. He then displayed a useful little table which summarised the differences between the declaration of non-infringement and the declaration of inessentiality. In the case of the latter there was no need for a product and process description (PPD) – but there should be an intention to manufacture in accordance with the standard.

Moving on to the litigation between InterDigital and Nokia, the judge observed that 29 InterDigital patents had been reduced to 7 following the exchange of written evidence. InterDigital then advanced no case on three, leaving just four, which included a patent and its divisional. In the event, only one patent was held essential to the standard.

To show how the system can work, Floyd J then gave an example of a paradigm case which should ideally be settled commercially rather than litigated (“Please don’t regard the courts as the first port of call”).

Alluding to case management problems, the judge asked: do we assume that everything will be dealt with at a single trial, or do we break the issues up? “For a judge, having to plough through 35 patents is a nightmare”. He recalled his own experiences: “When I was faced with the first one of these cases, the parties had already agreed a broken-up way of trying it”, in five bite-sized slots. Since it would be intolerable for the experts, counsel and solicitors to be handling all these cases together, the parties agreed, with the judge’s consent, to break the litigation up into two or three teams. Floyd J did not give his blessing to this proposal since, if the toll was too great for the litigants and their advisors, it was far more so for him.

UPLS: bright ideas, please!

This coming Tuesday afternoon I'm sharing an IBC Informa conference platform with Tim Frain (Director of IPR, Regulatory Affairs at Nokia) on the subject "Developments in Connection with a Unified Patent Litigation System for Europe". Tim is giving some background and explaining the meat of the current proposals, looking at them not merely from a patent-owner's point of view but in the context of the 'Standards & Patents' theme of the conference. My task is to put together a collection of perspectives that I can bounce off the proposals, leading into the discussion session.

I can produce my own list of 'favourite topics', but I feel that my contribution to the day's programme would be enhanced if I could reflect some of the informed and thought-out opinions of colleagues who are involved at the coalface of patent litigation rather than (as in my case) the standpoint of the enthusiastic spectator.

Above: will the unique characteristics of national patent dispute resolution system be lost or merged into a unified system once consensus is agreed?

If there are any issues you'd like me to mention, or points you'd like me to raise, please email me here and let me know. If you'd rather I didn't mention you as the source or inspiration of my comments, please just say so. In return, I hope to be able to report on anything of particular interest or note which is said during or after the session.

How easily can multi-issue disputes be slimmed down?

Fresh out today, and far too long to read in an instant, is the decision of Mr Justice Floyd (Patents Court, England and Wales) in Grimme Landmaschinenfabrik GmbH & co. KG v Derek Scott (trading as Scotts Potato Machinery) [2009] EWHC 2691 (Pat). It's an action for patent and design infringement in respect of a machine for separating potatoes from weeds, earth, clods, stones and haulm, met by a defence of non-infringement and a counterclaim for invalidity of Grimme's rights and ungrounded threats to sue for patent and design infringement.

Both sides seems to be the winners/losers in that, while Claim 1 of the Patent is invalid for obviousness, Claims 17 and 24 are valid; Claim 17 is infringed in some circumstances (both directly and indirectly) but Claim 24 is not; the design rights were not commonplace and were infringed in respect of the defendant's original product but not a subsequent version; the counterclaim for unjustified threats of patent infringement proceedings failed, while that for design right infringement succeeded.

Apart from wondering what the costs order is going to look like, PatLit finds itself wondering how much time might have been saved by any of the various procedural reforms that have been discussed in the past year. While the court needed five hearing days, the variety of issues under consideration and the need to examine witnesses suggests that there wouldn't be much scope for savings here. As ever, readers' comments are welcome.

Swiss patent litigation reform

"New Developments In Swiss Patent Law", an article by Andrea Mondini, and Philipp Groz (Schellenberg Wittmer, Zurich) last month in IP Frontline, reviews the structure and functionality of the Swiss court system as it affects patent litigation. The authors explain that, with around 30 patent proceedings a year, split between the 26 Swiss cantons, most cantonal courts of first instance have only little practical experience in patent litigation and are not presented with enough opportunities to develop the necessary technical and legal expertise (most of the 30 are split between just four of those cantonal courts anyway). This has led to the concentration of the jurisdiction for patent cases into a single specialized court, a move which is also expected to make Swiss patent litigation swifter and more attractive to those for whom the prospect of forum-shopping is available.

The new Patent Court Act (PatCA) creates a special federal trial court with exclusive jurisdiction over all Swiss disputes regarding validity and infringement, as well as applications for pre-trial relief. Related disputes, such as those involving royalty payments, may be brought either before the new court or, as before, to a cantonal court. The court will designate one of Switzerland's three official languages (German, French and Italian) as the language of the proceedings, though. another official language may be used for for submissions and oral arguments. With the consent of the court and the parties, English may also be used. The creation of the Federal Patent Court does not affect the parties' freedom to submit patent disputes to arbitration.

Court reform: nothing to avail those in the middle?

Writing in the November 2009 issue of Informa's ten-times-a-year Patent World, PatLit team member Michael Burdon pens the journal's 'In Closing' back page feature. The title, "Court reform is of critical importance", reviews patent litigation reform proposals both in Europe and within England and Wales over the past year, concluding:

"I do however fear that this system still caters only for those at the extremes -- those who are litigating patents which have considerable commercial importance, so-called 'big ticket' litigation, at the one end and those involved in more modest low-value disputes at the other. I believe that there is a significant number of companies who are caught in the middle and cannot avail themselves of either alternative".

You can read Michael's article here.